ING Group to Sell 33.5 Million Shares of ING US; First-Quarter Loss of About $2.8 Billion May Be Result
March 20, 2014 by Fran Matso Lysiak
AMSTERDAM – ING Group said it plans to sell about 33.5 million shares of common stock of ING U.S. Inc., representing about a 12% stake in its U.S.-based insurance, retirement and investment subsidiary. ING Group would use the money to reduce its core debt.
Assuming deconsolidation of ING U.S., the sale of these shares would result in an estimated negative profit and loss impact of about €2 billion (US$2.8 billion) after-tax, to be booked in its first-quarter results, the Netherlands-based ING Group said.
Also related to the sale, ING U.S. filed an update of its registration statement with the U.S. Securities and Exchange Commission, which now covers 26.5 million shares to be offered in an underwritten public offering. This statement also includes information concerning ING U.S. repurchasing shares of its common stock from ING Group valued at US$250 million, ING Group said.
Based on the closing price of ING U.S. shares on the New York Stock Exchange on March 17, ING U.S. would buy back from ING Group about 7 million shares.
The sale of the shares in the offering and the repurchase, if completed, would reduce ING Group’s stake in ING U.S. to about 45% from about 57% at year-end 2013. ING Group also would grant the underwriters an option to buy up to about 4 million additional shares, which, if fully exercised, would further reduce ING Group’s stake in ING U.S. to about 43%.
The Dutch financial services group previously announced its intention to divest its remaining stake in ING U.S. over time, in line with its strategy separate and divest its insurance and investment management businesses. The final timing, size and price for the planned offering and repurchase remain subject to market and other conditions, ING Group said.
In 2008, ING Group received a US$13 billion bailout from the Dutch government during the global financial crisis. The restructuring plan between ING and the European Commission as of 2010 required ING to divest its global insurance, ING Direct in the United States only, and asset-management operations by 2013 through sale, an initial public offering or a combination of those.
“With this planned sale, we deliver on our agreement with the European Commission to further reduce our stake in ING U.S. in 2014 and accomplish another important milestone in the restructuring of ING Group while receiving proceeds to further reduce ING Group core debt,” said Ralph Hamers, chief executive officer of ING Group, in a statement.
ING Group sold shares of ING U.S. through an IPO last May and a follow-on offering in October. If this offering is completed, any sale of ING Group’s retained ING U.S. shares will be subject to a lock-up period of 90 days from the pricing of the offering, ING Group said.
In January, ING U.S. said it would change its name to Voya Financial Inc. in April (Best’s News Service, March 11, 2014). But ING U.S. (NYSE: VOYA) previously said a rebranding period through September would follow as its Dutch parent divests some of the global businesses.
ING Group said that on a successful completion of these transactions, the retained minority stake of ING Group in ING U.S. will be deconsolidated. This would fulfill its requirement under the terms of the restructuring agreement with the European Commission to divest at least 50% of ING U.S. and deconsolidate this business before the end of this year.
ING USA Annuity and Life Insurance Co. currently has a Best’s Financial Strength Rating of A (Excellent).
Shares of ING U.S. were trading at $35.30 a share on the afternoon of March 19, down 2.75% from the previous close.
(By Fran Matso Lysiak, senior associate editor, BestWeek: fran.lysiak@ambest.com)